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Investors are eagerly waiting for Nvidia (NVDA) to report quarterly results after the closing bell on Wednesday. The report serves as a test for the artificial intelligence (AI) trade after Chinese AI startup DeepSeek unveiled a new model that rattled the market.
KeyBanc Capital Markets equity research analyst John Vinh joins Julie Hyman and Josh Lipton on Market Domination to discuss what he expects from the highly anticipated earnings report.
"Over the long term, I think the compute [total addressable market] TAM or the compute processing that's needed to train these AI models versus where we thought it was maybe a few months ago ... is going to be a little bit smaller" due to DeepSeek's advancements, Vinh says.
The analyst explains, "These optimizations that DeepSeek had introduced are likely going to be incorporated into some of these other AI models that [Alphabet's (GOOG, GOOGL)] Google and OpenAI are also developing." He expects this to happen shortly, which will drive "a surge in demand for these Nvidia [graphics processing units] GPUs."
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"The biggest risk to Nvidia over the medium to longer term is how quickly these optimizations that DeepSeek has introduced make their way into these kind of frontier AI models ... and that results in a significant reduction in the amount of compute intensity recorded during these models that could represent a source of risk to Nvidia over the medium term," Vinh tells Yahoo Finance.
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This post was written by Naomi Buchanan.